Kenya Airways embraces Boeing in plan to cut cost

Kenya Airways (KQ) unveiled its plans to transition away from Embraer and Bombardier aircraft in favor of Boeing planes as part of its mono-fleeting strategy.

This strategic move is aimed at optimizing KQ's fleet and network plan, with a focus on cost containment and long-term efficiency.

While the transition will be gradual to prevent any sudden disruptions, CEO Allan Kilavuka has emphasized the benefits of mono fleeting, particularly in reducing fleet operational maintenance and training costs for crew and engineers.

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By simplifying the fleet and aligning with larger Boeing aircraft, Kenya Airways aims to overcome limitations associated with smaller aircraft types.

The current KQ fleet consists of a mix of owned and leased planes, including wide-body jets like the Boeing 787, narrow-body jets such as the Boeing 737, Embraer regional jets, Bombardier Dash 8-400 jets, and Boeing 737 freighters.

The transition to mono leasing will complement KQ's recent efforts in lease rental restructuring, aimed at reducing overall lease ownership costs.

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KQ's road towards cutting costs

In 2021, the airline successfully negotiated lease reductions with 10 out of 12 lessors, resulting in an average reduction of 22 percent across the fleet.

Additionally, KQ extended sublease agreements for three Boeing B777-300ER aircraft, further optimizing their leasing arrangements.

While these initiatives have contributed to cost savings and improved financial performance, Kenya Airways still faces challenges, including high fleet ownership costs and a substantial debt burden.

The company's fleet costs include various expenses such as short-term lease expenses, depreciation, impairment of aircraft and related equipment, amortization of right of use, return condition, and variable lease expenses.

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To address these challenges, KQ has been actively managing its fleet, achieving an 18 percent reduction in aircraft rental obligations since 2021, resulting in significant monthly savings and a reduction of outstanding lease deferrals.

The airline has terminated leases for two 777-300ERs and is currently in negotiations to terminate leases for two sub-leased 777-300ER aircraft.